Stronger Vancouver threatens housing affordability

Homebuilders cannot afford additional costs created by policy decisions

Our industry is dependent on a community embracing the idea of live, work and play. While we appreciate the partnership in the City of Vancouver’s Stronger Vancouver efforts, we implore the city to consider a vision tempered by the realities of our current housing affordability and homelessness crises.

Contrary to popular belief, homebuilders cannot afford additional costs created by policy decisions. With housing prices already far above the affordability level of most Clark County residents, builders in the entry- to mid-level markets must squeeze every cost efficiency out of each home, including their profit margin, to have a marketable product. This leaves builders little room to absorb new, added costs.

To avoid increasing home prices, more thought should be given to two proposals: drastic increases in park impact fees (PIF) and fire sprinkler requirements. If adopted, these policies would have the greatest detrimental effect on housing affordability. Together they would add approximately $8,000 to the price of one single-family home, which according to a recent National Association of Homebuilders (NAHB) study, would price-out 6,200 Clark County residents from homeownership.

The proposed Single-Family Residence PIF increase of $3,383, by itself, will price out 2,625 residents. Through the city’s own Stronger Vancouver outreach efforts, we have learned that the residents would rather pay to restore existing parks than build new ones. Since PIFs are limited to paying for new capacity – not for maintenance or to address existing deficiencies – the idea of increasing PIFs seems out of line with the desires of the community.

Although well intentioned, the requirements for sprinkler installation in new homes would add another cost that would disproportionately affect the mid- to entry-level housing market. The additional $4,000-$5,000 cost per home has not been justified through any public process, meeting or testimony, and therefore it is inappropriate to include in this proposal.

Currently, the number one concern of our citizens is homelessness. It would be contradictory to increase the price of housing while the council deals with a homelessness crisis. Any disruption throughout the supply chain of the housing market increases the cost of housing and further hinders those simply trying to stay housed. Unaffordable or nonexistent housing in the mid- to entry-level market prevents empty nesters and others from downsizing, others from trading up and renters from moving in; all which trickles down to the affordability and availability of rental units. Pricing is not the only concern in this crisis: If the added costs don’t pencil out, projects at these price points will not get built, further restricting an inventory already below needed capacity.

Housing affordability isn’t a localized problem or one that can be solved exclusively through local solutions; it is a regional problem in which each jurisdiction has a role. Clark County’s median home price is $369,000, while the median income is $75,000. This income level is approximately $23,500 less than what is needed for an affordable mortgage leaving about 65% of our citizens priced out of the new home market.

This problem is further compounded by the “missing middle” that exists in our housing inventory. Lower-priced starter homes, condos and townhouses are missing due to statutory requirements, ever increasing regulation and the cost of land, materials and labor. The revenue proposals we have highlighted will only serve to exacerbate the effects on the housing market. The upward pressure of too few houses, especially at the mid-to-low price points, coupled with the filtering effect on our real estate market, will only serve to further harm lower income households and those experiencing homelessness.

The additional housing costs included in this package are only some of the many costs attributable to government action, including impact fees, permit fees, Washington’s Real Estate Excise Tax, regulatory compliance and more.

As an industry, we recognize the need for a long-term comprehensive plan and the revenue streams to support it, but we urge proposals to be as least disruptive as possible and always considered through the lens of housing affordability.

Michael Shanaberger is the 2019 president of the Building Industry of Clark County, and is director of sales with Romano Construction Services.